Food industry, Then, Now, Forever!

Talking about 2015 alone, there were about 50 deals making a total of about $200 million investments.

With this uncertain growth driving the US$13.56 billion Indian food industry and growing at a rate of 17 per cent per annum, these companies are getting investors’ attention by raising funds for strengthening their team and expansion in the country.

The money guzzlers

Investment thrust in food start-ups has witnessed a rapid growth in last two years. Over 100 companies got funded from top investors in the country, making 2015 the year of food investments. According to advisory firm Grant Thornton, investment values increased at a compounded annual growth rate (CAGR) of more than 57 per cent between 2011 and 2015, while investment volumes increased at a CAGR of over 62 per cent.

Bengaluru based Swiggy, a food ordering and delivery platform has grown over 20 times in the last few months. This online food delivery model has witnessed continuous growth in orders from its inception, which has assisted them to expand to other cities.

“After analysing the consumer landscape in India, it became clear to us that Swiggy as a food delivery company is best positioned to win, given their focus, execution, and long-term vision,” said Michael Chou, Partner at Harmony Partners. “Their growth is very strong and they provide much better experience to customers and restaurants (Two key stakeholders in the ecosystem). We are very excited to partner them and help broaden their lead.”

On the other hand, Mumbai based HolaChef has so far raised 3.4 MN by Anand Lunia (India Quotient) in January 2015, Kalaari Capital in June 2015, Ratan Tata in September 2015 and a few angel investors led by Kashyap Deorah.

“In food technology business, scale is the key. However, the core idea that led to Holachef’s existence is the personal touch of a chef,” shared Saurabh Saxena, Co- Founder, HolaChef.

Overcoming challenges

Major challenges for such start-ups are standardisation and availability of fresh supply. As the model is cashing on the delivery space, poor infrastructure and traffic conditions pose a problem, adding limited shelf life of the product and varying taste preference of a diverse audience.

“We are trying to manage these issues using technology and reliance on historical data to predict demand for a certain taste or recipe, added Saxena who delivers 2500+ orders daily to locals of Mumbai and Pune.

Another major challenge hitting this industry that led to the closure of many start-ups is the popular belief that food ordered from restaurant is unhealthy. It’s a big mental block that people have.

“ZuperMeal connects homemakers who love to cook, with consumers who like healthy and tasty home-cooked food. We get the freshly cooked food picked up and delivered through a network of delivery boys, and also do the payments settlement between the consumers and providers, shared Pallavi Saxena, Co-founder ZuperMeal, which is backed by Sanjeev Kapoor.

Scaling on variety

As this sector is giving customers’ a wholesome choice of wide variety of food, these start-ups are luring them with exotic delicacies. Recently, Gurgaon based InnerChef, which serves quick ready to eat meals has acquired Flavour Labs, a food truck in Gurgaon and EatOnGo, an on-demand meal services in Bengaluru. “These acquisitions will help extend InnerChef’s offerings amid two of the fastest growing markets in India: NCR and Bengaluru. We are also acquiring awesome talent who share our passion for food and technology. We are on a high growth path and excited about building India’s biggest food tech platform, “shared Rajesh Sawhney, Co- Founder, InnerChef.

Seeing a great opportunity in centralised kitchen segment, Holachef is on another ride to enter the space.

“The centralised kitchen facility is thus an opportunity for our chefs to scale. Because of this change, we have been able to extend our service hours (now we deliver from 9:00 am to 11:30 pm) and more categories (we have added breakfast and evening snacks recently),” added Saxena who is planning to replicate the same model in other cities. “For now, we will focus on consolidating operations in Mumbai and Pune. Then, we plan to expand to at least 2 more cities by end 2016,” elaborated Saxena.

Hence, we can say that Food-tech is much more than online ordering and delivery of food. There is a lot that can be done to bring technology in all aspects of food - from raw material supply to order management and delivery management. Today these players have started tackling this space diligently. . It will take some assumptions, more of innovation and technology to organise this large space and bring in unprecedented level of efficiency in the entire food-space.

The information contained herein is of generic nature only, and Franchise India is not, by means of this website or any part thereof, rendering professional advice or services. Before making any decision or
taking any action that might affect your finances or business, you should consult a qualified professional advisor. Your use of this website or any of its pages or links given, is at your own
risk and you assume full responsibility and risk of loss resulting from your usage. With respect to use of the website, kindly visit www.franchiseindia.com/terms.